When I asked for your opinions last week about content pricing strategies, I added that there was a need for mobile advertising systems that could help support content, and allow users free access to services, like they enjoy on the wired Web, while still providing for revenues for content and service providers.
A new report from KPMG says that 40 percent of mobile users surveyed around the world don’t want to pay anything extra for mobile multimedia content. This is a serious disconnect with thinking from operators that believes services like mobile TV will provide a serious boost to their ARPUs. Obviously, the other side of that statistic is that 60 percent of users are willing to pay a premium — but when nearly half your target market isn’t interested, there’s a problem, and a new business model is needed.
KPMG says operators should use the services as a churn reduction tool, which is maybe about half right. But, again, operators need to help create an ecosystem in which advertising can support content, so that the end user doesn’t always have to pay. Operators won’t want to eat the costs of providing content to users — otherwise they’d have done so already. They’re not looking to offer mobile television because they think it will keep people from switching to one of their rivals, as those companies will also be offering essentially the same services. They want the revenue boost.
But that revenue boost doesn’t have to come solely from user subscriptions, and there are other ways to monetize content than usage fees. Content doesn’t have to be free, either, but users don’t always have to be the ones paying the bill.
—–>Follow us on Twitter too: @russellbuckley and @caaarlo
Carlo. My company Tomo Software is working on a solution for ad-supported mobile applications. We think that we address many of the needs you present here.
If you or others are interested, we are looking for initial trial members and partners. So feel free to contact me at rich at mobilitee.org or use the contact information at http://www.tomosoftware.com.
[...] Carlo at Mobhappy posted about the lack of a way to provide enhanced mobile content and features without charging. [...]
How evolved is mobile marketing in the US?…
On ClickZ, Laura Marriott tries to find out whether North America is ahead or behind Europe when it comes to mobile marketing. It a quite interesting article to realize the differences among the two continents, and understand the solutions (not……
Le secteur Telecom va encore bouger…
Beaucoup d’agitation dans les Telecoms en ce moment. Le prix est toujours au centre des débats et c’est Bruxelles qui pousse à plus de concurrence sur les tarifs telecom. Elle s’attaque en ce moment à faire baisser le coût du SMS car il ressort….
Interesting points, Carlo. To be fair, however, the assumptions and conclusions from the KPMG report and your own observations create more questions than answers…
Let’s get to the point:
Advertising: Yes, it will play a role in mobile content. It’s a fundamental business component for almost every media type that I can think of.
Free/Full Priced: It’s not black or white. Price elasticity is alive and well. It’s up to content publishers and content distributors to find out what the right mix is. Both will take a hit on profits in the short-term for the sake of mid-term sustainability.
40/60: A desperate study… When are these companies going to stop charging people so much money for worthless results? The fact is, some people are willing to pay and some people aren’t. It’s a simple supply/demand curve. Thankfully, consumers didn’t stop using or dismissing the Internet when opinions were at a similar point. Or BMWs. Or Pepsi. Or…
Service/Churn: Well, I suppose that we’ll need to read the study to understand which 50% was right… And contrary to what you stated, operators are willing to “eat the costs” of content as a marketing expense in the short-term for mid-term content business. Their goal? As you finally concluded: Boost revenue. That’s the point of business, or?
And finally, the point which we’ve somehow… mutually agreed upon…
Revenue Boost: It’s plausible and even likely . Monetizing content from its value to advertisers is how the world works. Content attracts eyeballs and eyeballs attract advertisers. Mobile operators can (and are) getting their heads around it and particpating… let’s hope that they continue to do so that we don’t have to go through the “net neutrality” discussion with them if they find that they’ve missed it like the fixed-line operators did.
To suggest an ammendment to your closing statement:
“Content [and bandwidth] doesn’t [always] have to be free, either, but users don’t always have to be the ones paying the [entire] bill.”
My company has been doing ad-supported mobile content for a few years now. We originally started with a service called mfaith (http://mfaith.com) that sends a daily verse to subscribers phones. With the revenue cut the carriers take, we believe the ad-supported model is the better way to go. It opens up a great ad vehicle for brands that want to target certain demographic markets, and gives the subscribers the content for free which is what they want.